Charles C. Spackman and Another v. Sang Cheol Woo

HCA 571/2019

[2020] HKCFI 2748

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 571 OF 2019

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D E C I S I O N

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A. Introduction

1.This is an application by the defendant (“Mr Woo”) to set aside orders for the issue and service of the writ out of jurisdiction and for its substituted service and to set aside a default interlocutory judgment based on those orders. 

2.The 1^st plaintiff (“Mr Spackman”) is a Korean American businessman.  He is a US national and has also since March 2009 been a permanent resident of Hong Kong.  The 2^nd plaintiff (“SMG”) is a company founded by Mr Spackman and incorporated in Hong Kong and operates entertainment talent agencies in the Republic of Korea (“Korea”).  Mr Woo is a businessman resident in Korea.

3.The plaintiffs instituted the action herein by Writ of Summons issued on 2 April and amended on 10 April 2019 against Mr Woo for damages for defamation, malicious falsehood and unlawful interference with business and economic interests.  A statement of claim was also filed on 10 April.

4.On 24 April 2019, Master S P Yip granted the plaintiffs leave to issue a concurrent amended writ and to serve it on Mr Woo out of the jurisdiction at an address in Korea.  On 27 September 2019, Master Hui made an order for substituted service of the amended writ.  On 3 October 2019, pursuant to that order, the plaintiffs served the amended writ on Mr Woo by delivering it to Kobre & Kim, a firm of solicitors in Hong Kong.

5.On 13 November 2019, in the absence of any Notice of Intention to Defend given by Mr Woo, interlocutory judgment for damages to be assessed was entered for the plaintiffs (“Interlocutory Judgment”), the plaintiffs having abandoned their claim for injunction.

6.On 6 December 2019, Mr Woo issued a summons for an order that the above two orders made by the Masters be discharged and that service of the amended writ on him be set aside and, alternatively, the Interlocutory Judgment be set aside.

7.On 13 December 2019, the plaintiffs issued a summons seeking an order that in the event the court set aside the Interlocutory Judgment, Mr Woo do forthwith pay to the plaintiffs the costs incurred in the action up to 6 December 2019, alternatively the costs incurred in applying for the Interlocutory Judgment.

B.  Background

Korean proceedings

8.The parties have a long history of litigation between them, stemming from events that occurred 20 years ago.  In brief, in 2000, Mr Spackman was a director of Littauer Technologies Co Ltd (“Littauer”), a company then listed on KOSDAQ, and Mr Woo was a major shareholder of Linux International Co Ltd (“Linux”).  In around April 2000, Mr Woo transferred his shares in Linux to Littauer in exchange for shares in Littauer.  In July 2000, Littauer acquired a company called AsiaNet Corp Ltd (“AsiaNet”) by another exchange of shares.  There were wild fluctuations in the share price of Littauer in 2000 and beyond.  The price of Littauer shares suffered a very substantial drop after Mr Woo’s acquisition and he virtually lost all his investment.  In contrast, Mr Woo says, Mr Spackman realised his shares in August 2000 at a huge profit. Littauer was delisted in 2003. 

9.In July 2003, Mr Woo started proceedings in the Seoul Central District Court against 11 defendants including Littauer, another company called KTIC, and Mr Spackman, alleging, inter alia, that they had conspired to acquire (through Littauer) AsiaNet, which was worthless, at an inflated price, and spread false information to push up the share price of AsiaNet and Littauer.  Mr Woo claimed compensation representing the difference between the purchase price of the Littauer shares and the much lower price when he sold them. 

10.Mr Woo failed at first instance but succeeded on appeal to the Seoul High Court against 5 of the defendants in September 2011.  In respect of Mr Spackman, who failed to take part in the appeal, the Seoul High Court held that, under Article 150(3) of the (Korean) Civil Procedure Act, he “shall be deemed to have made admissions” to the claims against him.  The Seoul High Court ordered Littauer, Mr Spackman, KTIC and two other defendants to pay Mr Woo a sum of KRW5,207,884,800 plus interest (at a rate of 5% p.a. from 5 June 2011 to 29 September 2011 and at 20% p.a. thereafter), equivalent to over HK$100 million.

11.Littauer, Mr Spackman and KTIC appealed to the Supreme Court of Korea.  In October 2013, the Supreme Court allowed the appeal of Littauer and KTIC and remitted their case to the Seoul High Court, but dismissed Mr Spackman’s appeal.  Mr Woo subsequently failed in the High Court on the remitted case as against Littauer and KTIC.

12.In 2017 Mr Spackman filed an application in the Seoul High Court to set aside that court’s judgment against himself and for a retrial, but it was dismissed.  His appeal to the Supreme Court was also dismissed in May 2018.

US and other proceedings

13.For the purpose of enforcing the Seoul High Court’s judgment against Mr Spackman, Mr Woo has been taking various steps in several jurisdictions including the United States (Massachusetts and New York).

14.Thus in February 2017, Mr Woo made an application for discovery against Mr Spackman’s daughter, and Harvard University, which the Massachusetts court granted, resulting in the daughter being subpoenaed, inter alia, to give a deposition.  On 21 February 2017, Kobre & Kim LLP, which acted for Mr Woo in the United States, issued a press release regarding the outcome via the website www.prnewswire.com (“KK Press Release”). 

15.In May 2017, Mr Woo filed a motion for summary judgment in lieu of complaint in the Supreme Court of the State of New York to enforce the Seoul High Court’s judgment (“NY Proceedings”).  In support of the motion, Mr Woo filed the following documents:

(1)  a memorandum of law in support of the NY Proceedings (“NY Memorandum”);

(2)  a declaration by Mr John Han, one of Mr Woo’s lawyers at Kobre & Kim LLP (“Han Declaration”), which exhibited, inter alia, the following 3 documents.

(3)  a Preparatory Pleading, ie a ground of appeal (“GOA”), filed by Mr Woo in his appeal in the Seoul High Court;

(4)  an article with the title “[Littauer Technologies Siphons Off $19.6 Billion] Punishment to Begin for Alleged ‘Crimes’ from Loophole in System”, published in the SE Daily on 25 March 2001 (“SE Daily Article”); and

(5)  an article with the title “Harvard Ordered to Reveal Financial Records of Influential Donor”, published in the New York Times on 2 March 2017 (“NY Times Article”).

These 5 documents will be referred to below collectively as the “NY Proceedings Documents”.

16.In September 2018 the New York court granted summary judgment against Mr Spackman for over US$13.8 million, recognising the Seoul High Court’s judgment against him.  In July 2020, the New York court found that Mr Spackman had failed to provide post‑judgment discovery as ordered and held him to be in contempt of court.  Mr Spackman has filed an appeal against the contempt order.

17.In June 2020 the BVI Commercial Court gave judgment recognising the Seoul High Court’s judgment against Mr Spackman.  There are also ongoing proceedings in Hong Kong (HCA 1586/2016) and in Singapore for recognition and enforcement of the Seoul High Court’s judgment.  Mr Spackman’s application to plead the Interlocutory Judgment herein as a counterclaim against Mr Woo in HCA 1586/2016 has failed.  That action is now fixed for trial in September 2021. 

C.  The plaintiffs’ claims

The Writ

18.By their Writ of Summons against Mr Woo:[1]

(1)  Mr Spackman claims damages for:

(a)  the publication in 2017 and 2018 of 6 documents (namely, the KK Press Release and the NY Proceedings Documents) to various individuals and entities in, inter alia, Hong Kong, Singapore, Mainland China and Korea, which contained statements defamatory of him; and

(b)  malicious falsehood arising from the same publication.

(2)  SMG claims damages for:

(a)  the publication in 2017 and 2018 of the same documents to the same recipients, which contained statements defamatory of it;

(b)  malicious falsehood arising from the same publication; and

(c)  wrongful interference with its business and economic interests by such unlawful means.

(3)  The plaintiffs also claim an injunction to restrain Mr Woo from further publishing the same or similar defamatory words.

19.These causes of action are more fully pleaded in the Statement of Claim.  For the purpose of discussion, I shall focus below on the claims in libel, as the other causes of action do not raise any materially different points.

The Statement of Claim

20.In their Statement of Claim, the plaintiffs contend that the KK Press Release and the NY Proceedings Documents contained statements defamatory of Mr Spackman (“Spackman Defamatory Statements”) and that the NY Proceedings Documents contained statements defamatory of SMG (“SMG Defamatory Statements”) (collectively, the “Defamatory Statements”).

21.Mr Spackman complains that the Spackman Defamatory Statements bear the meaning, inter alia, that he dishonestly, and in conspiracy with his associates, caused Littauer to enter into a US$1.3 billion self‑dealing merger in 2000 so as to defraud Littauer’s other shareholders including Mr Woo.

22.SMG complains that the SMG Defamatory Statements bear the meaning, inter alia, that SMG entered into a self‑dealing transaction with a company called Spackman Entertainment Group and was or would be involved in committing securities fraud in relation to its initial public offering.

23.It is said that the Defamatory Statements were published by Kobre & Kim LLP on Mr Woo’s instructions, as follows:

(1)  The KK Press Release was published on or around 21 February 2017 to the general public through the website www.prnewswire.com which is accessible to the general public, and Kobre & Kim LLP and Mr Woo knew or ought to have anticipated the risk that the KK Press Release would be repeated in whole or in part by various news outlets and publications around the world.

(2)  The NY Proceedings Documents were sent by post in 2017 or 2018 to 62 particular recipients specified in Schedule 7 (“Recipients”)[2] “under the guise of a cover letter purporting to be a ‘Document Preservation Notice’ ”.[3]  Of the Recipients, 8 were stated to be located in Hong Kong,[4] and the others in Korea (17), Mainland China (6), Macau (2), United States (2), Canada (1), Singapore (17), Japan (2) and British Virgin Islands (5) respectively, with 2 unspecified.[5]

24.The loss caused to Mr Spackman was pleaded as including that, as a result of reading the KK Press Release, which was reported by, inter alia, Conventus Law, the New York Times and the Harvard Crimson, on or around 3 March 2017, SMG asked for his resignation from his management role in SMG which he subsequently did.

25.It is pleaded that the publication of the Defamatory Statements caused harm to SMG’s reputation in the places of publication set out in Schedule 7 and that expenses in excess of US$27 million were incurred to address the concerns raised by companies invested in by SMG.  It is also pleaded that SMG suffered loss in Hong Kong because, inter alia, a number of anticipated investments specified in paragraph 62 did not materialise as a result of the counterparties receiving the Defamatory Statements.

The plaintiffs’ affirmations

26.In their affirmations filed for their ex parte application for leave to serve out, the plaintiffs relied on RHC Order 11 rule 1(1)(b) and (f) as the “gateways” for service of process out of the jurisdiction.  Under these rules, leave may be granted for service of a writ out of the jurisdiction if:

“ (b) an injunction is sought ordering the defendant to do or refrain from doing anything within the jurisdiction (whether or not damages are also claimed in respect of a failure to do or the doing of that thing)”

“ (f) the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction”.

27.According to the affirmation of its director Mr Na, SMG accepted that a number of the Recipients received the NY Proceedings Documents outside of Hong Kong and SMG suffered damage outside of Hong Kong as a result, and that these were matters over which the Hong Kong Court had no jurisdiction.[6] SMG however relied upon the publication of the SMG Defamatory Statements to five of the Recipients in Hong Kong, namely, nos. 4 to 8 in Schedule 7 to the Statement of Claim.[7]  In addition, SMG also relied upon publication to nine of the Recipients (being nos. 10, 12, 13, 15, 22, 34, 39, 59 and 61 in Schedule 7) who were located in Korea, Singapore and Macau.  Mr Na’s affirmation further stated:

“ I have been advised by SMG’s lawyers and verily believe it to be true that these other jurisdictions also recognise the torts or similar actions of defamation, malicious falsehood and unlawful interference with business. I therefore verily believe that the double actionability rule, insofar as it is applicable, is satisfied in the present case.”

28.In the case of Mr Spackman’s claims, it is clear from his own affirmation that he sought leave to serve out only in relation to the publication of the Spackman Defamatory Statements to eight of the Recipients in Hong Kong (being nos. 4‑8, 27, 33 and 35 in Schedule 7).[8]

29.I shall discuss in section G below the consequences of the discrepancies between the Writ, Statement of Claim and affirmations in respect of publication to recipients located outside Hong Kong.

D. Principles on setting aside ex parte orders for material non‑disclosures

30.The plaintiffs had a duty to make full and frank disclosure to the court in their ex parte applications to the Masters. Failure to do so may in itself be a ground for setting aside the orders obtained.  The principles guiding the exercise of the power to set aside orders made on ex parte applications on the ground of material non‑disclosure are not in dispute: see eg China Medical Technologies, Inc (in liquidation) v Bank of China (Hong Kong) Ltd [2018] HKCFI 1395, §§65‑72.  They need not be repeated here.

31.It is relevant to note that the plaintiffs were applying for leave to issue and serve the concurrent Amended Writ and Statement of Claim[9] against Mr Woo out of the jurisdiction at three specified addresses in Korea or elsewhere in Korea, and subsequently for an order to allow substituted service.  Counsel for the plaintiffs emphasise that the focus of the inquiry in an application for leave to serve out is different from that in an application for interlocutory remedies such as Mareva injunction.  In the former, the ultimate question is whether the court should assume jurisdiction over the claims.  In that context, it is submitted on the basis of BP Exploration Co (Libya) Ltd v Hunt [1976] 3 All ER 879, 893 and Hady v Bazar [2012] 3 HKLRD 29 at §103 that in general, a failure to refer to arguments on the merits which the defendant may seek to raise in answer to the plaintiff’s claim would not amount to material non‑disclosure, unless they are of such weight that their omission may mislead the court in exercising its jurisdiction under the rule and its discretion whether or not to grant leave.

E.  Principles on service out of the jurisdiction

32.The principles governing the exercise of the power under Order 11 to grant leave to serve out of the jurisdiction are likewise not in dispute.  First, the plaintiff must show that there is a serious issue to be tried on the merits of the claim.  Secondly, the plaintiff must demonstrate a good arguable case that his claim falls within one or more of the “gateways” in Order 11 rule 1(1).  Thirdly, the plaintiff must satisfy the court that in all the circumstances Hong Kong is clearly or distinctly the appropriate forum for the trial of the dispute and the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.

33.In relation to a claim for defamation, in particular, where Order 11 rule 1(1)(f) is relied upon, the plaintiff is required to show that a real and substantial tort has been committed in Hong Kong: Oriental Press Group Ltd v Google LLC [2018] 1 HKLRD 1042, §§3.1–3.4; Xu Ying v Xu Weihong [2020] HKCFI 1955, §§15–21.

F.  Whether there was material non‑disclosure

34.There are 5 main matters that Mr Woo says are material but were not disclosed or were misrepresented by the plaintiffs to the court on the ex parte applications.[10]  I discuss them in turn below.

(1)  The mistake about the documents sent to the Hong Kong recipients

35.The plaintiffs emphasised in the Statement of Claim and in their ex parte application that the NY Proceedings Documents were sent with a Document Preservation Notice to all the Recipients, including the 8 in Hong Kong.  The NY Proceedings Documents are defined as consisting of 5 documents as specified in §15 above. 

36.Mr Woo has since produced in evidence the cover letters to most of the Recipients and stated that only 7 of them (none of whom was in Hong Kong) were sent all those 5 documents and the others were only sent the NY Memorandum.  The plaintiffs admit that they did not verify what documents were received in the case of at least 54 of the Recipients, but “assumed” that they all received the full set of the NY Proceedings Documents.  Mr Spackman explained that he was already quite embarrassed by the publication of the Defamatory Statements and did not want to trouble further each and every one of the Recipients.  Irrespective of the reasons, it is clear in my view that there was a misrepresentation of fact by the plaintiffs to the court.  The issue is whether and in what way it is material.

37.The NY Memorandum is 17 pages long, whereas the Han Declaration and its exhibits including the GOA, SE Daily Article and the NY Times Article run into 322 pages.  The Spackman Defamatory Statements found in the NY Memorandum are pleaded in Schedule 2 to the Statement of Claim, whereas those found in the other 4 documents are pleaded in Schedules 2, 3, 4, 5 and 6.  The SMG Defamatory Statements found in the NY Memorandum are pleaded in Schedule 2 to the Statement of Claim, whereas those found in the Han Declaration are pleaded in Schedule 3. Different meanings have been pleaded in relation to the various statements said to be defamatory of Mr Spackman.[11]

38.Mr Kwok and Mr Lee, who appear on behalf of the plaintiffs, submit that the meaning of the Spackman Defamatory Statements contained in the NY Memorandum is essentially the same as the meaning of the Spackman Defamatory Statements contained in the other 4 documents. While there is some similarity and overlap between them, I do not consider that they are the same. 

39.It is also submitted that the meaning of the SMG Defamatory Statements contained in the NY Memorandum is essentially the same as that of the SMG Defamatory Statements contained in the Han Declaration.  There is more force in this submission, as a comparison of the relevant part of Schedule 2[12] with Schedule 3 will show that the NY Memorandum already contained the substance of the allegedly defamatory statements and meanings.

40.Counsel also submit on behalf of the plaintiffs that had the mistake not been made, the picture presented to the court on the ex parte application would have been the same, namely, that statements referring to the plaintiffs and bearing the pleaded defamatory meanings and which caused damage to them were published by Mr Woo to the Recipients.  They submit that the misrepresentation does not have any material effect on the question of whether the court should assume jurisdiction in the present case and that at most, the issue of what each Recipient received may be a matter of the scale of publication which may affect causation and quantum of damages.

41.Such a submission has to be approached with caution because at common law, each communication of the material is a separate publication and gives rise to a separate cause of action in libel: Duke of Brunswick and Luneberg v Harmer (1849) 14 QB 185.  In my view, the issue of which recipients received which documents is material to the application for leave to serve out in at least two respects.  First, the application was not an abstract one for the court generally to assume jurisdiction over Mr Woo, but an application for leave to serve specific legal process, namely, the Amended Writ and Statement of Claim out of the jurisdiction on Mr Woo. The misrepresentation rendered those two documents materially inaccurate.  Mr Spackman, who according to his affirmation applied for leave to serve out only in relation to the publication to the Hong Kong recipients, could place no reliance on the Han Declaration, GOA, SE Daily Article and NY Times Article at all, which none of the recipients in Hong Kong received.  SMG’s claims in respect of the recipients it relied on would similarly be affected: it appears that of the overseas recipients relied upon by SMG in its affirmation (as mentioned in §27 above), only one (ie no. 61 in Schedule 7, a Singaporean company) received the whole package of the NY Proceedings Documents.  This was clearly something relevant to the Master’s decision whether to grant the order sought for the specific legal documents to be served out of the jurisdiction.  Indeed, for my part, in the light of the available information, I would not have granted leave to serve those documents out of the jurisdiction without major amendments.

42.Secondly, the fact that the Hong Kong recipients in fact received only the NY Memorandum while some overseas persons (including 6 Korean individuals or companies) received the full set of NY Proceedings Documents may raise questions as to whether another jurisdiction, such as Korea, would be a more appropriate forum.  The more limited the publication in Hong Kong and the more substantial any publication abroad, the less easy it would be to demonstrate that Hong Kong is the appropriate forum: Earn Crown Investment Ltd & another v Zhang Yu Fang & another (HCA 712/2015, 29 April 2016), §15; Berezovsky v Michaels & another [2000] 1 WLR 1004, 1032D.[13] It may be noted in this context that three of the Recipients in Hong Kong were merely providers of corporate service to SMG (nos. 5, 6 and 7 of Schedule 7) and that special damage has been pleaded by SMG in relation to only one Hong Kong recipient (no. 4 of Schedule 7).

43.It is not a valid excuse for the plaintiffs to say that they did not know as a fact that many of the Recipients did not receive the NY Proceedings Documents except the NY Memorandum.  The duty to make full and frank disclosure extends not only to facts known to the applicant but also any additional facts which should be known if proper enquiries had been made: R v Lloyd’s of London, ex parte Briggs [1993] 1 Lloyd’s Rep 176, 181; Kan Hung Cheung v Director of immigration (HCAL 74/2007, 13 February 2008), §16; Lau Wai Bing Alice v Lau Lee Kin Susanna & others (HCA 529/2007, 28 August 2007), §51.

(2)  Failure to disclose the argument that Mr Spackman controlled SMG at the time of his termination as a director

44.In the Statement of Claim, it is pleaded that SMG read the KK Press Release (which was reported by, inter alia, Conventus Law, the New York Times and the Harvard Crimson) on or around 3 March 2017, and as a result asked Mr Spackman to resign from his management role in SMG.  In his affirmation, Mr Spackman referred to his “forced resignation from SMG” and said that the KK Press Release was read by a number of directors of SMG in Hong Kong who then asked him to resign from his management role.[14]

45.In support of his application Mr Woo contends that:

(1)  SMG was controlled by Mr Spackman.  As at March 2017, SMG’s top 3 shareholders were GD Enterprise Holdings Ltd (“GD”) holding 27.91%, Spackman Entertainment Group Ltd (“SEG”) holding 24.53%, and DVG Ltd (“DVG”) holding 9.1%. 

(2)  At the time, Mr Spackman was the Executive Chairman and CEO of SEG.  Mr Spackman also controlled both GD and DVG, both BVI companies, through his nominees.  The registered beneficial owner of both of those companies was his brother‑in‑law through his wife, Mr Kim, whose recorded proof of address was a utility bill of Mr Spackman’s residential address in Hong Kong, although Mr Kim actually resides in Korea.

(3)  There are various items of evidence which show that Mr Spackman continued to have substantial interests in and control over SMG after March 2017.  For example, a wholly‑owned subsidiary of SMG in Singapore[15] was found to have paid rent in New York for Mr Spackman or his daughter, paid Mr Spackman’s US attorneys’ legal fees, and made substantial donations (US$500,000) to Harvard University on behalf of Mr Spackman to fulfil personal pledges he had previously made.

(4)  One of the directors of SMG, Richard Lee, was the subject of a Mareva injunction granted ex parte in June 2019 in Hong Kong (in HCA 1586/2016) based on the allegation and evidence that he was Mr Spackman’s nominee and holding assets on his behalf.

(5)  Because of his control over SMG, Mr Spackman’s suggestion that he was “forced” to resign from SMG was untrue.

(6)  Mr Woo has argued in other litigation with Mr Spackman that he controlled SMG, and Mr Spackman should therefore know very well that Mr Woo would raise this argument.  The plaintiffs should have but failed to disclose to the court at least that Mr Woo would raise this argument.

46.Mr Spackman denies having control over SEG, GD or DVG, or through them, SMG.  He says that SEG is a listed company in Singapore and he was similarly asked to resign from his role in SEG as a result of the publication of the Defamatory Statements.  As to GD and DVG, Mr Spackman says that his brother‑in‑law Mr Kim was (and still is) the beneficial owner, as canvassed at length in his application to set aside the Mareva injunction in HCA 1586/2016.  Mr Kim acquired GD in May 2008 and DVG in September 2010, even before SMG was incorporated.  As regards the payments made by SMG’s Singapore subsidiary on his behalf, Mr Spackman says that they were interest‑free loans to him.[16]

47.It is unnecessary for present purposes to go into great details about this dispute, since the focus here is simply whether the plaintiffs should have disclosed to the court the existence of Mr Woo’s argument.  In a recent decision dated 20 October 2020,[17] Deputy Judge Le Pichon decided to continue the Mareva injunction against Mr Spackman and three others, namely, Richard Lee, Azur Investissement Ltd (“Azur”) and Trinity Capital Advisors Ltd (“Trinity”) in HCA 1586/2016.  The following observations may be noted from her Ladyship’s decision:

(1)  At §§17‑18:

“ 17. … [Mr Woo’s] investigations revealed sales of SMG’s shares to BVI companies, namely, GD Enterprises Holdings Limited (‘GD’), Azur Investissement Ltd (‘Azur’) and DVG Limited (‘DVG’) at a low cost, with DVG transferring a portion of the SMG shares to another BVI company, Trinity Capital Advisors Ltd (‘Trinity’), also at a low cost. GD, Azur, DVG and Trinity (collectively ‘the BVI Entities’) resold the SMG shares to Spackman Entertainment Group Limited (‘SEGL’), a Singapore listed company, several months later at 23 times their purchase price.

18.   The pattern of disposition of shares in SMG by the BVI Entities between 18 August 2017 and September 2018 and at the share prices involved (mostly at US$1 or $3 with two transfers at HK$1) were suspicious and prima facie inexplicable.”

(2)  At §68:

“ Bluntly put, the irresistible inference to be drawn from the evidence presented in the present case is that the Defendant has gone to great lengths to evade adjudged liability since 2011. …”

(3)  At §73:

“ … there is ample evidence that [Richard] Lee had acted as the Defendant’s nominee:

(i) Apart from being a longtime associate/friend and college classmate of the Defendant, it is apparent from the website of the Spackman Group that he has held very senior positions within the Group including SEGL, Spackman Equities, Spackman Media Group Pte Ltd and SMG.

(ii) He has also acted as the corporate secretary for DVG, Azur and Trinity and had custody of their company records at his Singapore residence.

(iii)   Significantly, between 24 May 2017 (the day after the commencement of the New York action) and 11 January 2019, he disbursed just shy of US$300,000 for the Defendant’s benefit by payment for the Defendant’s legal fees and US taxes.”

(4)  At §78:

“ In my view, the Plaintiff had good reason and cannot be criticised for making each of the 4 applications for Mareva injunctions in different jurisdictions when the Defendant as judgment debtor has been evading payment since 2011. Assets of the BVI Entities [i.e. GD, DVG, Azur and Trinity] believed to be beneficially owned/controlled by the Defendant assumed chameleonic qualities, seemingly designed to frustrate enforcement of the Defendant’s liability.”

(5)  Deputy Judge Le Pichon further noted Mr Kim’s claim to be the beneficial owner of, inter alia, GD and DVG (§88) but concluded that his evidence did not withstand scrutiny (§97) and his credibility was seriously undermined (§103).

48.These are of course not findings of fact after trial and I do not rely on them as evidence of fact, but they in my view illustrate, and support the view I take on the similar evidence before me, that to say the least, there is an argument available to Mr Woo that Mr Spackman was in a position to control or exert influence over SMG through his shareholding and his connections with at least one of the directors, namely, Richard Lee.

49.The plaintiffs further contend that they were not aware at the time of the application for leave to serve out that Mr Woo would make the allegation that Mr Spackman controlled SMG.  It was only on 24 April 2019 and 4 June 2019 that Mr Spackman was first notified of the ex parte Mareva injunctions obtained by Mr Woo in Singapore and Hong Kong respectively based on such allegation.  Master Yip granted the order for leave to serve out on 24 April 2019.

50.In riposte, Mr Woo says that Mr Spackman must have known of Mr Woo’s allegation earlier, as Mr Woo had already obtained an ex parte injunction in the BVI on 11 April 2019 against, among others, GD and DVG, based on their being nominees of or controlled by Mr Spackman, and that the papers were served on those companies (of which his wife and brother‑in‑law were directors) on 12 April 2019.

51.It may well be that Mr Spackman knew about Mr Woo’s allegation before 24 April 2019, but it is not necessary to rely on this.  There is a continuing duty to make full and frank disclosure after an ex parte order is obtained, where the applicant discovers the ex parte order was obtained on a basis he could no longer support, or where the court has been misinformed or has been given materially incomplete information: China Medical Technologies, Inc (in liquidation) v Bank of China (Hong Kong) Ltd [2019] 2 HKLRD 710, §65.  In this case, the duty to make full and frank disclosure continued, at least while the matter remained ex parte, and especially when the plaintiffs made an ex parte application for an order for substituted service in September 2019, which was built on the earlier order for service out: Tillemont Shipping Corp SA v Taitexma Enterprise Corp [1993] 2 HKC 129.  It is not in dispute that the plaintiffs made no relevant disclosure then, when Mr Spackman could not claim to be ignorant of Mr Woo’s argument.  Indeed, as at September 2019, there was already a Mareva injunction in place in Hong Kong granted on the basis of evidence, inter alia, that GD and DVG were corporate vehicles of Mr Spackman and that Richard Lee was his nominee.  The real question therefore is whether this was a material matter that ought to have been drawn to the attention of the court.

52.On behalf of the plaintiffs, it is submitted that Mr Woo’s allegation is hotly contested and is being litigated in enforcement and injunction proceedings in Singapore and Hong Kong.  Counsel ask rhetorically: are the plaintiffs expected to disclose, in an application for service out, every single area of dispute in the parties’ litigation over the past five years in five different jurisdictions?  That, they submit, would impose an impossible burden on applicants and their advisers generally.

53.The question is to be dealt with on the basis of the ordinary principles on materiality.  The plaintiffs submit that Mr Woo’s allegation that Mr Spackman in fact controlled SMG is irrelevant to the ultimate question of whether the Hong Kong court should assume jurisdiction in the present case.  It is true that, ordinarily, the question whether a particular alleged loss was actually suffered by a plaintiff is a matter going to the substantive merits, there being a presumption of damage by the publication of a libel.  In the present case, however, it is to be noted that:

(1)  Insofar as the KK Press Release is concerned, only Mr Spackman (and not SMG) is suing for libel.

(2)  The KK Press Release is pleaded as having been published by  Mr Woo at the website www.prnewswire.com.[18]  This, however, does not constitute publication for a claim in libel because publication of material on the Internet takes place where it is downloaded and read, not where it is uploaded: Emperor (China Concept) Investments Ltd v SBI E‑2 Capital Securities Ltd & another (HCA 2686/2004, 10 January 2006), §12.  The Statement of Claim says SMG read the KK Press Release but it is not pleaded where and by which officer of SMG it was read, or whether it was the press release as published in the Internet or the reports in Conventus Law, New York Times or Harvard Crimson that were read. 

(3)  Assuming certain directors of SMG read the press release in Hong Kong,[19] the only publication relied upon is therefore the publication to SMG.  While I accept the test is not a “numbers game”, if Mr Spackman in fact controlled SMG, then that publication would seem to be technical and minimal.

(4)  This matter seems to me to be relevant to the question whether there was a real and substantial tort within the jurisdiction arising from the KK Press Release.  This is one of the key issues the court had to assess on Mr Spackman’s application for leave to serve out in relation to the statements in that article: Oriental Press Group Ltd v Google LLC, §§3.1‑3.2.

(5)  The matter also seems to me to be relevant to the related question of whether Hong Kong is the appropriate forum: see §33 above.  Even where there was a real tort committed within this jurisdiction against a plaintiff, so that the starting point is that he should be allowed to bring his claim here, the identity of the local publishee and his connection with the plaintiff, seen in the context of the publication of the statements in other jurisdictions (if any), are matters which the court can properly take into account as a consideration going to the question of the proper forum.

(6)  While Mr Spackman denies having control over SMG, his counsel have not gone so far as to contend that Mr Woo’s argument is wholly untenable.  Indeed, as illustrated by the court’s decision on the Mareva injunction referred to above, it would appear that there was at least a good arguable case that Mr Spackman had, through GD and DVG, a substantial shareholding in SMG and control over at least one of its directors as his nominee.

54.The plaintiffs’ duty of full and frank disclosure extended to the disclosure of matters of fact or law that could reasonably be expected to be raised by Mr Woo against the application: Fenn Kar Bak Lily v Goh Kim Lay [1995] 3 HKC 313, 317B; New Asia Energy Ltd v Concord Oil (Hong Kong) Ltd (CACV 347/1998, 3 November 1999).  It seems to me this is such a matter so far as Mr Spackman’s claim is concerned.

55.There had not been any final adjudication that Mr Spackman did in fact control SMG, and even in the face of Mr Woo’s argument the Master might have thought Mr Spackman had an arguable case sufficient for the purpose of the application.  It bears repeating, however, that the test is not whether, if the matter had been disclosed, the ex parte court would nevertheless have made the order, but whether the matters not disclosed, being relevant, should have been in the scales: Citibank NA v Express Ship Management Services Ltd & another [1987] HKLR 1184, 1190C.  This matter, in my view, quite clearly should.

(3)  Non‑disclosures relating to the “Document Preservation Notices” as a standard practice in New York litigation procedure

56.The plaintiffs’ materials for the ex parte application for leave to serve out stated that the NY Proceedings Documents were sent to the Recipients “under the guise of a cover letter purporting to be a ‘Document Preservation Notice’ ”, that they were sent “indiscriminately” to those numerous individuals and entities who had no personal relationship or connection with Mr Spackman, and that the alleged purpose of preservation of documents is implausible because many of the Recipients were beyond the jurisdiction of the New York court and the NY Proceedings were merely an application for summary judgment for recognition of the Seoul High Court court’s judgment, which would not have required the submission of any further evidence by Mr Woo.  This was relied upon as particulars of malice in relation to defamation as well as malice in the context of malicious falsehood.

57.On behalf of Mr Woo it is submitted that the plaintiffs’ statements were misleading and that the plaintiffs failed to disclose that:

(1)  Document preservation notices, by which third parties are notified that they may have in their possession evidence relevant to a judicial proceeding and requested to preserve such evidence, are a standard practice under New York procedure.  It is also common practice to enclose with such notice the originating process as information for the recipient.  The NY Memorandum is the legal document filed in support of Mr Woo’s motion for summary judgment.

(2)  Even after summary judgment was entered, the proceedings in New York law continue and post‑judgment discovery in aid of execution of the judgment (for the purpose of ascertaining and locating the judgment debtor’s assets) may be obtained not only against Mr Spackman but also from third parties.

(3)  For third parties who are located outside the United States, the New York court may, upon application by Mr Woo, issue letters of request for judicial assistance from courts abroad to assist in obtaining post‑judgment discovery in aid of execution.

(4)  Most of the notices were sent to shareholders and business counterparties and service providers of SMG as there was reason to believe that they had information relevant to Mr Spackman’s ownership interest in SMG or were his nominees.

58.The first three points above are not seriously in dispute.  It is also common ground that the plaintiffs did not disclose the above matters in their ex parte application.  It seems to me, however, that they are relevant principally to the merits of the plaintiffs’ substantive claims.  So long as the plaintiffs demonstrate that there are serious issues to be tried, these matters are not material to the court’s assessment of the applications concerning service.

59.It is submitted for Mr Woo that if the above matters concerning the nature and purpose of the Documents Preservation Notices had been disclosed, the court would have been able to see that the communication to the Recipients by way of those notices was protected by absolute privilege, on the ground that it was a publication on an “occasion properly incidental to judicial proceedings, and necessary for them”: Mann v O’Neill (1997) 191 CLR 204, 211-212; Attwood v Chapman [1914] 3 KB 275 at 287, drawing an analogy with solicitors’ correspondence during litigation which was held in Wong Shui Kee Roger trading as Roger S K Wong & Co, Solicitors v Victor L L Chu & others (CACV 3176/2001, 18 December 2002) to attract absolute privilege.  I have however not been referred to any authority on absolute privilege in relation to communication for the purpose of foreign litigation.  In any event, while there may be scope for further argument, the focus of the submissions advanced does not enable me to conclude at this stage that the point is necessarily fatal to the plaintiffs’ claims.

60.The same conclusion applies to Mr Woo’s argument of qualified privilege.  It is a defence to be raised by him based on a valid interest on his part in making the communication by way of the Document Preservation Notices, and an interest on the part of the Recipients in being given the information.  It would then be open to the plaintiffs, if appropriate, to raise the allegation of malice in reply.  These are not matters that need to be gone into in depth for the purposes of the applications on service.

61.It seems to me therefore that there was no material non‑disclosure under this head.

(4)  Failure to disclose the argument that the statements are protected by absolute privilege under New York law

62.It is common ground that by reason of litigation privilege under New York law, “statements made in the context of court proceedings are protected by privilege and cannot be the basis of liability, regardless of motive or whether true or false”.  There is also a reporting privilege that covers the “reporting of the underlying judicial proceedings and background material related to the case”.

63.The topic of absolute privilege was mentioned in Mr Spackman’s affirmation.[20] There he said absolute privilege might apply when the NY Proceedings Documents were first filed in the New York court for the purpose of the NY Proceedings.  But in respect of their re‑publication to the Recipients, the question is raised as to whether such publication was done for the purpose of or in the course of the NY Proceedings, which, he said, it was not, for a number of reasons given.

64.It seems to me that the plaintiffs did disclose the potential defence of absolute privilege.  Their reference to the application of such privilege when the documents were filed in the New York court was plainly a reference to the privilege under New York law.  When the documents were published to persons in Hong Kong, it is not clear that any absolute privilege under New York law could apply.  Any argument in this respect goes to the substantive merits of the plaintiffs’ claims which are not the focus of the inquiry on the applications on service.  I therefore do not consider that there was any material non‑disclosure in this regard.

(5)  Failure to disclose that the NY Memorandum can be downloaded from the New York court’s website without a login name or password

65.It is submitted on behalf of Mr Woo that the plaintiffs did not disclose in their ex parte applications that the NY Memorandum was a document that could be downloaded from the New York court’s website by anyone without a login name or password.

66.The plaintiffs admit that they did not draw specific attention to this fact, though it was stated in the Document Preservation Notice that the legal documents enclosed were “publicly available”, which was quoted in the Statement of Claim.[21]

67.I do not think this matter is material in the present context.  It is true that the documents were publicly available on the Internet, and Mr Woo could have sent a notice containing a hyperlink to them without being held to have published them: see Oriental Press Group Ltd v Fevaworks Solutions Ltd (2013) 16 HKCFAR 366, §88.  He sent the Recipients, however, not a link, but the NY Memorandum itself, and by doing so he published it to the Recipients.  The fact that they could have easily obtained the document elsewhere does not in my view affect the question of service out of the jurisdiction.  There was therefore no material non-disclosure in this respect.

G. The orders for service out and substituted service

68.I have concluded that there was material non‑disclosure to the court on the first and second points mentioned above.  They concern important aspects of the case bearing on the question of the scope of publication and connections with Hong Kong.  As mentioned in §41 above, the Amended Writ and Statement of Claim were rendered factually inaccurate by the mistake in relation to the documents sent to the Recipients.

69.Further, as mentioned in §§27‑28 above, by their affirmations Mr Spackman indicated an intention to proceed against Mr Woo in Hong Kong only in relation to the publication to the 8 Hong Kong recipients and SMG indicated an intention to sue here in relation to the publication to recipients nos. 4 to 8 (in Hong Kong) and nos. 10, 12, 13, 15, 22, 34, 39, 59 and 61 (overseas).  On this basis, in including matters relating to other recipients in various other jurisdictions in the Statement of Claim, the plaintiffs are guilty of an abuse: Berezovsky, pp 1012H‑1013A. The plaintiffs have gone on to obtain the Interlocutory Judgment on the basis of the Amended Writ and Statement of Claim which did not match the correct scope of the publication of the Defamatory Statements and the publications relied on in the affirmations.

70.In these circumstances, the appropriate and proportionate response of this court is, in my opinion, to set aside the order for service of the Amended Writ out of the jurisdiction.  Since substituted service of a writ on a foreign defendant inherently depends on service of the writ on him out of the jurisdiction: Tillemont Shipping Corp SA, the order for substituted service should also be set aside.  It follows that the Interlocutory Judgment must also be set aside.

71.Counsel for the plaintiffs urge this court to re‑grant leave to serve out if the Master’s orders are set aside.

72.I take note that while Mr Spackman’s case involves the complaint that he was forced to resign from SMG as a result of the publication of the KK Press Release, he chose not to disclose the contention and supporting evidence, which at the latest by September 2019 he knew would certainly be advanced by Mr Woo, that he (Mr Spackman) in fact controlled or at least exercised great influence over SMG.  In such circumstances, it would be a rare case in which the court should entertain a request for a re‑grant of the order aside (see Dong Shin F & T Co Ltd v Hanmec Co Ltd [2010] 5 HKLRD 261 at §39; Kan Hung Cheung v Director of Immigration (HCAL 74/2007, 13 February 2008), §79) and I would not in this case exercise the discretion to re‑grant leave to Mr Spackman to serve the writ out of the jurisdiction on Mr Woo.

73.Further, I may add that, as stated above, the Statement of Claim erroneously pleaded the KK Press Release as having been published by Mr Woo at the website www.prnewswire.com, rather than where it was downloaded and read.  At a subsequent paragraph it is said that Mr Spackman suffered damage “as a result of SMG reading the KK Press Release, which was reported by inter alia Conventus Law, the New York Times and the Harvard Crimson, on or around 3 March 2017”.[22]  It is said in Mr Spackman’s affirmation that “the KK Press Release was read by a number of directors of SMG in Hong Kong”,[23] but it is not clear which person read it and whether he or she read the press release itself or the news reports pleaded in the Statement of Claim; nor is it clear that those reports were reports of the press release rather than the journalists’ own coverage of the proceedings in the Massachusetts court including the allegations and court orders made therein.

74.I accept, however, Mr Kwok’s submission that SMG’s position can and should be considered separately.  Having done so I am prepared to re‑grant leave in relation to SMG’s claim arising out of the publication of the NY Memorandum to 5 Recipients in Hong Kong (nos. 4 to 8, as stated in Mr Na’s 1^st affirmation).  In my view, leave should not be given for any claim based on publication to any recipient outside the jurisdiction because:

(1)  Mr Na’s affirmation for SMG only sought leave in relation to the publication to 9 overseas recipients, namely, nos. 10, 12, 13, 15, 22, 34, 39, 59 and 61 (in addition to recipients nos. 4 to 8 in Hong Kong).  In relation to the publication to those 9 overseas recipients, the evidence that the double actionability rule is satisfied is tenuous to say the least.  Mr Na merely said he was advised that those jurisdictions “recognise the torts or similar actions of defamation, malicious falsehood and unlawful interference with business” and that he “therefore verily believe[d] that the double actionability rule, in so far as it is applicable, is satisfied in the present case”.  This is not evidence that the respective specific publications were actionable in those jurisdictions, and Mr Na’s belief seems to me to be wholly without basis.

(2)  Assuming that the publication to those 9 overseas recipients is actionable by SMG in those jurisdictions respectively as the plaintiffs contend, SMG has made no attempt in its evidence or argument to show why Hong Kong would clearly or distinctly be the appropriate forum for the trial of those claims, which is hardly obvious given that: (a) Mr Woo is in Korea; (b) those publishees were (and presumably still are) located in Singapore, Korea and Macau respectively; (c) the torts took place in those jurisdictions, which would prima facie be the natural fora for the respective actions (see The Albaforth [1984] 2 Lloyd’s Rep 91; Berezovsky, p 1014); (d) the claims would at least in part be governed by the laws of those jurisdictions respectively; (e) SMG’s pleaded businesses are all in or related to Korea.[24]  It should be noted that in Berezovsky (see p 1008E-F), the case relied upon by the plaintiffs, the action in England was confined to the publication of the relevant statements in England.

H. Setting aside default judgment

75.In case I am wrong on the conclusions above, I shall very briefly state my views as to whether the Interlocutory Judgment should be set aside as a regular judgment, based on consideration of the merits. 

76.The main question is whether Mr Woo has demonstrated real prospects of success in his defence.  It seems to me there are real prospects, not only arguable points.  The KK Press Release was arguably a victory announcement and a report of the outcome of litigation in Massachusetts and might well attract qualified privilege as a “fair and accurate report” of proceedings or as a report to the public on a matter of public interest.  The communication by the Document Preservation Notices, likewise, might also be covered by privilege as a step properly incidental to the commencement of discovery proceedings or letters rogatory procedures against the third parties in Hong Kong and elsewhere in aid of execution against Mr Spackman in New York, and also by qualified privilege generally because of Mr Woo’s interest in sending the information and the Recipients’ interest in receiving it.

77.I also take into account the circumstances in which the Interlocutory Judgment was entered.  What happened was that on 3 October 2019, the Amended Writ and the order for substituted service were delivered by way of service to the office of Kobre & Kim, Hong Kong.  Kobre & Kim replied that they did not represent Mr Woo in connection with these proceedings and were not able to accept service on his behalf.  Meanwhile the plaintiffs’ solicitors, John C H Suen & Co, drew attention to the order for substituted service, and also filed an application with the Registrar for default judgment.

78.By letter dated 21 October 2019, Kobre & Kim stated that Mr Woo intended to defend the proceedings and required another two weeks to engage Kobre & Kim and obtain legal advice before filing an acknowledgment of service, and asked the plaintiffs’ solicitors to confirm that they would consent to an extension of time and refrain from making any further applications against Mr Woo in the meantime.  Without receiving any reply, Kobre & Kim wrote to John C H Suen & Co again on 5 November stating that Mr Woo required more time to engage solicitors formally, and asked the plaintiffs to refrain from filing any further applications.  On 13 November 2019, the Interlocutory Judgment was entered against Mr Woo.  On 14 November 2019 Kobre & Kim tried to file an acknowledgment of service on behalf of Mr Woo but it was too late.

79.Why Mr Woo and Kobre & Kim thought the plaintiffs would exercise any restraint or show any goodwill towards them, I cannot imagine, given the bitter history of disputes between the two sides.  But the course of events seems to me to suggest naivety rather than a culpable disregard of the proceedings on the part of Mr Woo and his solicitors. 

80.I do not think there was any significant delay in Mr Woo’s application to set aside after learning of the Interlocutory Judgment.  He obtained a full set of the papers from John C H Suen & Co on 25 November 2019, and filed his summons on 6 December 2019.

81.Accordingly, I would have set aside the Interlocutory Judgment even if the orders for service out and substituted service had not been set aside for material non‑disclosure.

I.   Conclusion and order

82.For the above reasons, I conclude that there was material non‑disclosure in the plaintiffs’ ex parte applications for leave to serve out and substituted service.  On that ground those orders would be set aside, and with them, the Interlocutory Judgment.  Leave is re‑granted to SMG for service out on Mr Woo, confined to its claims based on the publication of the NY Memorandum to 5 Recipients in Hong Kong (nos. 4 to 8 in Schedule 7).

83.I make a costs order nisi that the plaintiffs are to pay forthwith, jointly and severally, the costs of Mr Woo’s summons dated 6 December 2019 and the plaintiffs’ own summons dated 13 December 2019, on the party and party basis, to be assessed summarily on the papers if not agreed.

Mr Dennis W H Kwok and Mr Jun Lee, instructed by John C H Suen & Co, for the 1^st and 2^nd Plaintiffs

Mr John Han, of Kobre & Kim, for the Defendant